If these conditions do trigger reforms - which in many countries is long overdue - that would be welcome. However, the fact that a member country can be assured that its membership of the euro - even in the case of permanent violations of the rules - will be saved at any price causes moral hazard and creates an obvious potential for blackmail.

...

Suggestions as to how one might control and limit the issuance of such bonds are unconvincing. Almost all treaties promising European fiscal discipline have been broken time and again. The worst example was delivered by France and Germany in 2002-03, when they violated the Stability and Growth Pact, and even organised a political majority against the application of its rules.

The article is very strange, he basically accuses Greece of blackmail and moral hazard while admitting that Germany and France broke the rules when it suited them, with no consequences. And the article contains a veiled threat hat Greece should be expelled while admitting the treaties don't allow it.

Of course, part of the dissonance is that the SGP is a pretty broken piece of work in the first place. My sense is that we don't want a Europe based around a strong, enforced SGP as it will just lead to collapse by a different route...